Skip to main content
Guiding you to a better future

Search

For a successful business, you need a viable business idea, the skills to make it work and the funding. Discover whether your idea has what it takes.

Forming your business correctly is essential to ensure you are protected and you comply with the rules. Learn how to set up your business.

Advice on protecting your wellbeing, self-confidence and mental health from the pressures of starting and running a business.

Learn why business planning is an essential exercise if your business is to start and grow successfully, attract funding or target new markets.

It is likely you will need funding to start your business unless you have your own money. Discover some of the main sources of start up funding.

Businesses and individuals must account for and pay various taxes. Understand your tax obligations and how to file, account and pay any taxes you owe.

Businesses are required to comply with a wide range of business laws. We introduce the main rules and regulations you must comply with.

Marketing matters. It drives sales and helps promote your brand and products. Discover how to market your business and reach your target customers.

Some businesses need a high street location whilst others can be run from home. Understand the key factors from cost to location, size to security.

Your employees can your biggest asset. They can also be your biggest challenge. We explain how to recruitment and manage staff successfully.

It is likely your business could not function without some form of IT. Learn how to specify, buy, maintain and secure your business IT.

Few businesses manage the leap from start up to high-growth business. Learn what it takes to scale up and take your business to the next level.

Q&A: Commercial mortgages

The property team at Funding Options provide the answers to key questions about taking out a commercial mortgage

What is a 'commercial mortgage' and why might I want one?

A commercial mortgage is a loan secured on property that is not your residential home. The proceeds from a commercial mortgage are typically used to buy, refinance or redevelop commercial property.

Would I need to offer any security or deposit?

Security is taken via a legal charge on the property or asset being financed. A lender will typically carry out a valuation to ensure the property is suitable security for the mortgage. Most lenders will expect at least a 30% deposit, with some being able to take other property and assets into account to provide 100% of the finance required.

What restrictions could apply?

A property must be valued and confirmed to be suitable security for the lending. Damaged properties or properties that are unlikely to sell will prove to be poor security for a commercial mortgage. Lenders can look at customers aged from 18-80. Some lenders will considers customers with poor credit, arrears and missed payments.

What would be the term of a commercial mortgage?

Terms range from five to 30 years. Typically, commercial mortgages range from £25,000 up to £10m or more.

Are they mostly variable rate mortgages?

Mortgages can have fixed or variable rates against Bank of England Base Rate or LIBOR [ie the average interest rate estimated by leading banks in London that the average leading bank would be charged if borrowing from other banks].

Are there flexible options with regards to monthly payments?

Some lenders will allow you to only pay the interest over the term of the mortgage if you wish, and it's possible to have low monthly payments with the interest due being added to the capital borrowed.

Are there likely to be any arrangement, valuation and legal fees?

Lenders will often charge arrangement fees, legal and valuation fees and in some cases there will be early redemption penalties and exit fees.

How important will my trading history be?

Lenders want to know that your business can afford to repay the loan, but what if you're thinking of buying a property to start a business? Typical loan to value (LTV) ratios for a brand new business with no trading history will be around 50% of the purchase price. For example, if you want to start a business and need to buy a shop, warehouse or office for £200,000, you'll need to have a minimum of £100,000 deposit to get a business mortgage.

What about the type of business I'm running?

How you use the property makes a difference, both to the interest rate you'll pay and how much you can borrow. Owner-occupied businesses such as offices or shops can normally get a maximum LTV of around 75%, while investment properties will have a lower LTV. Rates are also dependent on the location and quality of the property.

How do I find the best deal for my business? What about brokers?

You could try our finance finder tool. It enables businesses to find brokers with many years experience and established relationships with a number of lenders. This means you won't have to wait weeks to speak to a bank, which may not help with your enquiry anyway. Brokers will often have a thorough understanding of the lending market and can quickly match customers to lenders. Brokers will also have access to exclusive lenders that won't take enquiries from customers directly and are able to secure exclusive rates and deals that can't be found on the high street.

Stay up-to-date with business advice and news

Sign up to this lively and colourful newsletter for new and more established small businesses.